Debtor's Island

When Iceland’s financial system collapsed in the fall of 2008, the country’s future became scarily uncertain. Simultaneously, Iceland’s stock market crashed (down 77 percent in one day), the krona rapidly devalued (down more than 50 percent against the euro), the housing bubble burst, unemployment shot up more than 400 percent, and the country’s three large banks went bankrupt and were nationalized (leaving the government with debt eight times its annual budget). Iceland is not in a recession. It is in a depression.

Since then, the country has struggled to find a path out. Various bailout schemes fell through. A political crisis arose. And now the people of Iceland are facing a grim choice: